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Another Day, Another Vaccine: Is Moderna a Buy on the News?

Moderna is flying higher on Monday thanks to positive news surrounding its vaccine. Here's how to trade the stock now.

Moderna  (MRNA) - Get Moderna, Inc. Report was hitting new all-time highs on Monday following news on its coronavirus vaccine candidate.

Shares opened higher by 12.2% on the day, which was enough to secure the new high. The stock rallied 15.5% in early trading before giving up half those gains by lunch.

Last Monday, equity prices soared on positive news from Pfizer  (PFE) - Get Pfizer Inc. Report regarding its vaccine efforts. Now investors will be looking for some follow-through to Moderna’s news.

We’re seeing stocks like Wynn Resorts  (WYNN) - Get Wynn Resorts, Limited Report, Boeing  (BA) - Get Boeing Company Report and Expedia  (EXPE) - Get Expedia Group, Inc. Report all jumping on hopes that a working vaccine or multiple vaccines will soon be ready for the public.

For Moderna, investors are more concerned with how the stock will trade from here. Will it cough up all of its gains like Pfizer or will it be able to maintain its new highs?

Trading Moderna

Daily chart of Moderna stock.

Daily chart of Moderna stock.

After spiking higher in May, shares topped out near $88. While it wasn’t clear at the time, Moderna stock was about to settle into a multi-month trading range.

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Resistance at $88 held firm, even in July. For several consecutive sessions, Moderna threatened to break out as it was hitting new highs. However, the stock just couldn’t close over that mark, ultimately pulling back to $55 range support.

Last week, Moderna stock broke out over downtrend resistance (blue line), as bulls bid up the name in anticipation of positive vaccine news.

Now that they’re getting it, will this turn into a sell-the-news event?

On a dip, I want to see the $88 to $90 area hold as support. If prior resistance can turn into support, that will bode well for the bulls. A break could send the stock back down to $80 or potentially even lower, with the 50-day moving average down near $71.

Preferably, shares will be able to hold the July highs near $95 and retest $100. If Moderna can clear $100, it opens the stock up to more gains.

Specifically, the 138.2% extension comes into play near $111, followed by the 161.8% extension at $120.55.

At this stage, the news seems bullish. However, Pfizer’s news was too and the stock was unable to hold up. Use the levels above to gauge how strong Moderna is going forward.